It was auctioned off to the lender for $80,000, who then passed the property on to JPMorgan Chase Bank. After a year of going through bank trustees, Pamiko Properties nabbed the duplex with a mortgage from Minnwest Bank Metro as part of a broader investment in dozens of North Side residences.
Pamiko’s owner was Paul Koenig, dubbed by City Pages in a 2010 investigation as the “one-man housing crisis” after his housing empire collapsed, sending shock waves through the North Side’s already distressed housing market. Then 1611 Hillside fell into foreclosure again. Finally, in 2011, Assertive Mpls Properties stepped in and bought the property and another Pamiko house for $110,000. But the stability did not last for long.
The last round of renters at 1611 Hillside were the worst, Caesar recalled.
“There was just so many people there coming and going all the time that some of us thought there was drug dealing going on there. … I’ve never heard of that many people living in a house like that,” she said.
In January 2013, two fires in the same evening displaced 24 people.
The city condemned the property and placed it on the vacant registry, but neighbor Millner said he saw as many as nine teenagers living in the building last summer — and that it was not boarded up past the immediate aftermath of the fire, contrary to city regulations for vacant buildings.
The property was advertised on the Northstar Multiple Listing Service for $75,000. Its description: “Huge duplex — 8 total bedrooms. 4 bedrooms up & 4 bedrooms on lower unit. Fire damage so plan your showing accordingly.”
It offered the potential for great profits, listing combined rents of $2,615 a month.
But when no one jumped, the price dropped. And dropped some more.
The new owner of 1611 Hillside, Jon Erickson, said he doesn’t want people to ever drive by his properties and say, “There’s a rental!”
He vowed: “My goal is to be able to help improve the neighborhood so that my property values go up, and my neighbors’ values are going to go up. … When 1611 Hillside is going to be done, it’ll be the nicest duplex” in the area.
Erickson said he wants to hold onto the building for at least five years. He’s bought nearly a dozen properties in the city over the last year and a half, often for five figures and some in foreclosure. He said he is in Minneapolis every other week. He plans to begin renting out 1611 Hillside in March, after making repairs.
Why not invest in San Francisco, 30 miles from his home in Danville, one of Northern California’s wealthiest communities? The economics of the Bay Area’s high-priced housing market don’t work out quite as well as they do in Minneapolis, according to Erickson, who has also invested in other states.
John Hoff, a controversial blogger who writes under the name Johnny Northside, said it is harder for people to obtain loans on boarded-up homes with assessments left on them, “yet the path is wide open to these investors.”
“The economic field is weighted toward these investors that have money at the ready, that can snap these properties up,” said Hoff, who calls the “Hillside hot spot” cursed. “We need more homeowners, bottom line.”
Erickson said the problem is not due to investors buying too many properties.
“You need to make it a community in which families want to buy homes and raise their children,” he said. “Right now, north Minneapolis isn’t that area.”